HOW TO START A BUSINESS IN THE NETHERLANDS

Once you got these FIVE matters covered, your company is good to go!

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INCO Business Group can fully assist you with the full incorporation of the company.
In this article, we will highlight the expertise of our Incorporation Team, which can help you to successfully start your Dutch business. In short, we can assist you with:
 

• Starting a Dutch business, including company registration

• Tax and legal consulting

• Getting a VAT and EORI number 

• Payrolling Staff

• Filing your tax returns

• Dedicated Company Officer Services

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Is the Netherlands the best country to start a company

The Netherlands is one of the most innovative countries in the world, with a great entrepreneurial climate. It’s low taxes, professional (and English-speaking) workforce, and great infrastructure makes the Netherlands the ideal gateway to Europe. 
But will The Netherlands be the best country for YOU to establish your business? It typically is! 
Having said that, it would be best to contact our Incorporation team to discuss your situation, and determine if the Netherlands is indeed the right choice for you!

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Do you require a residency permit to manage a Dutch company?

EU nationals are free to start a Dutch company, and work and live in The Netherlands without any extra requirements (other than registering themselves at their City Council). 

For non-EU nationals, immigration regulations need to be considered, in case you are planning to stay for a long-term in The Netherlands. 
As a business owner, owning both an overseas business, as a Dutch company, it’s relatively easy to obtain a multi-entry Schengen Visa. This will allow you to travel to the Netherlands and reside in the Netherlands for a max of 90 days per trip, with a max. of 180 days per year. If you are planning to become a resident in The Netherlands, you can consider the Entrepreneurs Visa, or the Startup Visa. You can find more information in our Business Toolkit. 

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Drafting a Business Plan

You might be ambitious to expand your business, based on the potential that you recognize in the Dutch market. And it really just might take (a lot of!) hard work in order for your company to succeed. But a Business Plan or Strategy can help you make the right (investment) decisions concerning your company, and it will help you avoid expensive (or time-consuming) mistakes. One of the advantages of a Business Plan is that you can discuss your plan with our team, or entrepreneurs with experience in the Dutch market to see if you have the right expectations. It might also help you get finance, or even a residency permit, if such matters would be required.

At the very least, it’s important to have a good understanding of the legal requirements that you will encounter in the first year(s) and to determine what kind of budget it would require to keep your company in good standing and operational. 

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Decide on your market entry strategy

One important part of your business plan would be: to determine your (best) market entry strategy. Should you start with the establishment of a sales office, or does it make more sense to start a fully operational office?
Based on your situation, our Incorporation Team can assist you to make the right decision. 

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Decide on a legal business structure & a company name!
One of the most important decisions that you need to make when starting a business in The Netherlands, is which type of business structure you will use. It’s not only an important decision, it’s typically also a question that creates a lot of uncertainty for entrepreneurs. Before you want to make a decision on which Dutch legal entity you like to use, you probably like to get a full understanding of all the options. Which is why, this step (deciding on the business structure) can take quite some time. 
When you incorporate a Netherlands company, there are a few matters to consider, such as:

• Do you like to protect your company assets optimally?

• How many shareholders/investors will be involved?

• Should each shareholder be able to freely sell its shares to third parties (or require permission?)

• What are the tax consequences of dividend payments to the shareholder?

• Will profits be reinvested in Netherlands?

• Do you require a Dutch bank account?

• And so on…

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As you can notice, these matters vary from legal matters to practical matters, like opening a Dutch bank account. The reality is, that it's becoming more and more difficult to open corporate bank accounts for international corporate structures. Therefore an ‘independent’ company with an individual shareholder is more likely to get a bank account quickly.

While an individual shareholder might affect the withholding tax on outgoing dividends, because ‘tax treaties’ don’t apply to payments to individuals. 

You can contact us for a full overview of available legal entities, and what they can mean for you. ideally, we would discuss your requirements, and suggest the correct legal entity for you. We can prepare a full Formation Guide, which includes all considerations as mentioned above, that will inform you of the complete procedures, fees and taxes. 

Our Incorporation Team can inform you on the variety of legal entities that The Netherlands has to offer, and will explain to you the pro’s and con’s of each. 

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The Dutch Private Limited Company (by shares)

The most commonly known type of legal entity (worldwide!) is the Private Limited. Also called a ‘Company by Shares’. 
This legal entity is called a BV (Besloten Vennootschap) and it’s the equivalent of the U.K. PLC, or the German Gmbh, the Delaware LLC, and many other similar entities worldwide. 

Compared to most European Private Limited Companies, the Dutch BV is fairly simple to incorporate. There are no local shareholders and directors required, and the minimum capital requirement for a Dutch BV has been abolished per 1 October 2012.
The incorporation of a Dutch BV requires the involvement of a Dutch notary. There is no requirement for each shareholder or director to visit The Netherlands and meet the Dutch notary. The incorporation can be done by Power of Attorney,  although each stakeholder needs to be properly identified (using legalized copies of identification documents and signatures). 

 

To start a Dutch BV you will require the following documents:

1. Proof of identity certified unless the person visits the Dutch notary or our office (color copy passport, national identity card (only allowed for EU nationals).

2. Proof of residential address, no more than 2 months old, certified (gas/electricity bill or credit/debit card bank statement )

3. If you have corporate directors or shareholders then the extract of the Registrar of Companies, showing the authorized persons, must be delivered (notarized), as well as the Articles of the corporate body, and a Legal Opinion on the current authorities and legal structure

4. Rental agreement of your office or flexi-desk. 

How long does it take to establish a Dutch BV?

The total incorporation procedure for a Dutch BV can normally be completed in a couple of days. 
For the entire procedure, including the gathering of necessary information and documentation, in our experience you should consider a period of one to two weeks. We emphasize that an accelerated procedure is possible.

 

Read more about setting up a Dutch BV in our Business Toolkit. 

 

Alternative for the Dutch Private Limited: The Public  Limited 

A well known alternative of the Private Limited company, is the Public Limited Company. The Public Limited is called the NV (Naamloze vennootschap) in The Netherlands. It does require a paid up share capital (45.000 EUR) and has other requirements to consider. 

The Branch Registration
For many companies, planning to expand to The Netherlands, the first consideration is if the Dutch branch will work best for them. To put this in other words; the registration of a Dutch branch is typically Plan A! If however, there are solid reasons not to opt for the Dutch branch, then the Dutch Private Limited (B.V.) would typically be considered Plan B. 

A Dutch branch is only an option for existing (overseas) companies. It’s obvious that in order to register a Dutch branch, there needs to be a legal entity in place which can be registered in The Netherlands (at the Chamber of Commerce (KvK.nl).

Another important issue is that your statutory documents must be available in English, Dutch or German. If this is not the case, it might be a costly affair to arrange this afterwards, because the translation will require an official certification.

The Dutch branch is very popular among British entrepreneurs, especially those affected by Brexit. However also companies from within Europe, India and The United States often use the branch registration as their preferred corporate structure to enter the Dutch market.  

 

Which documents are required to register a Dutch branch?
To register a Dutch branch you will require the same documents as when you incorporate a Dutch BV (which would be owned by a corporate body):

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1. Proof of Identity and Proof of residential address of each stakeholder

2. Proof of legal address, such as a rental agreement

3. Certified set of the statutory documents of the overseas company (including the Articles, a recent extract, and a Legal Opinion confirming the current authorities and corporate structure)

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How long does it take to register a Dutch branch?

The registration of a Dutch branch is relatively simple, and as mentioned, does not require the involvement of a Dutch notary. Therefore in theory the registration of a Dutch branch and can be done within 1 day, during a visit of the representatives of the (parent) company to The Netherlands. 

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It’s important to schedule the trip to Netherlands properly, so that all the correct documents will be taken along, including the correct legalization. Typically it requires our clients about 1 or 2 weeks to get the documentation in order, unless the parent company is based in a EU country and the statutory documents are issued in English, Dutch or German(which would allow to speed the branch registration process up!). 

Read more on how to register a Dutch branch in our Business Toolkit. 

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Other available company forms in The Netherlands

Aside from the examples above (BV, NV, and the branch) there are other types of business structures, which are less common for global entrepreneurs. Such as the:

• Foundation (Stichting) or the STAK (Stichting Administratiekantoor)

• Cooperative (Coöperatie)

• Association (Vereniging)

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And the business structures without any corporate veil, or legal personality, such as the:

 

• Sole trader/single-person business (Eenmanszaak or ZZP)

• Limited partnership (Commanditaire vennootschap or CV)

• General partnership (Vennootschap onder firma or VOF)

• Commercial/professional partnership (Maatschap).

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How do you decide which business structure works best for you?

Although the Dutch B.V and the Dutch branch are the most popular options to start a Dutch business, the choice that you need to make is very personal. If you are a well-established multinational expanding to The Netherlands, you will be considering different matters, then if you are a sole proprietor starting your first business. For this reason, we have created an overview of possible scenarios below, which will help you decide the right business structure for your situation:

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• Start-Up, Expat or SME

• Scale-up or SME

• Multinational

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And in case you are aiming for:

• a European VAT/EORI number

• fully-fledged warehouse/office in The Netherlands

• Optimizing your taxes

• Protecting your (international) assets

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Needless to say, please contact our Incorporation Team to discuss your situation, so we can discuss all of this information via phone, or during a personal meeting in The Netherlands.

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An overview of your Business Structure

When you start a business in The Netherlands, you should consider the following important matters (and planning!) for your Business Structure:

1. Select the legal Entity

2. Consider the formation requirements & timeline

3. Decide on a trade Name

4. Consider the costs of registration

5. Get a full understanding on the legal and administrative requirements

6. Formation of the Company and registration at the Chamber of Commerce

7. Apply for Tax ID’s

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Read more information on our Dutch incorporation services here: Company Formation page

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Which corporate taxes does a Dutch company have to pay?

Every Dutch business is of course subject to taxation.  The most commonly known tax for companies, is the Dutch corporate income tax, which must be paid within 6 months after the end of the fiscal book year.
You will have to pay tax over all (worldwide) profits of your company. Currently the corporate tax rate is 16.5% up to 200.000 annually, all profits above this sum are taxed for 25%. (Lower CIT rate will be 15% in 2021)

Corporate income tax is only due if your company made a profit on its business activities in The Netherlands.

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Read more about all Dutch Taxes in our Business Toolkit.

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Register with the Dutch Commercial Register/Kamer van Koophandel
If you start your operations or legal entity in The Netherlands, then your business must register with the Dutch Commercial Register at the Netherlands Chamber of Commerce (KVK).

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How to apply for Dutch Tax ID

By registering a business at the Chamber of Commerce, your company will be automatically assigned a Corporate Income Tax ID. This is also the case when your business is not effectively being managed from The Netherlands, or if you didn’t assign a Dutch board member (or shareholder).

The Dutch corporate income tax ID will be shared to you via post, as well as the login details to access the online portal of the tax authorities. The online portal allows you to check for any pending tax filing requirements, and submit tax returns when necessary.

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How to apply for a Dutch VAT number

A Dutch VAT number is typically issued automatically to Dutch businesses by the Dutch tax authorities, soon after the registration at the Chamber of Commerce. This does not apply for Dutch business which are managed by non-resident directors. In such a case, the Dutch tax authorities might request more information about the type of business activities that are performed in The Netherlands, and other matters that can determine your business’ economic ties with the Netherlands (such as a physical office, warehouse, staff, customers, etc.)

 

In case your business will not perform local business activities, but it will work with Dutch customers, it can apply for a ‘non-resident’ VAT number. Such applications are considered by Belastingdienst Buitenland (The non-resident department of the tax authorities), and typically issued within 2 weeks. The VAT number for non-residents is practically the same VAT ID, however, one of the limitations of the non-resident VAT ID is that it will not allow you to apply for an art. 23 exemption, waiving the import duties or VAT on import of goods into The Netherlands. 

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How to apply for a Wage Tax ID  and Register as an employer for payroll taxes
In order to employ staff in your Dutch business, it’s important to consider the payrolling formalities. One of the requirements is to submit a wage tax return each month, in which the salary is declared. Based on the salary, the employer is responsible to withhold the wage taxes and social contributions. In order to comply with the wage tax filing requirements for your company, it’s required to apply for a wage tax ID. The Dutch wage tax ID can be applied by submitting  the application form to the tax authorities. The procedure usually takes about 2 weeks, but while you are awaiting the wage tax ID, the employee can already start working for your business. Once the wage tax ID is activated, and/or the first month has expired, the first wage tax return can be submitted.

 

Check whether you need a Dutch Business License or Professional Qualifications

Most business activities in The Netherlands, do not require a Business license or professional qualifications. Any person (>18 years) can start a company in The Netherlands, without any required approvals or licenses. This also applies for trading companies, that perform import- and export activities. 

However, certain professions do require professional qualifications (such as an accountant), and some business activities do require a business license in The Netherlands (such as financial services, etc.) It’s not required to apply for a business license for a recruitment agency, or travel agency.

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Describe your business’s general terms and conditions

When starting business activities in The Netherlands, it’s suggested to draft General Terms and conditions and publish them via filing at the Chamber of Commerce (Kamer van Koophandel).

With general terms and conditions, it is immediately clear what rights and obligations you and your customer have. The so-called 'small print’ will save you a lot of time. Your customers know exactly where they stand. General terms and conditions can reduce the risks that you run as an entrepreneur. Important points stated in the general terms and conditions are, for example:

• Liability. As an entrepreneur, you can in principle be held liable for all direct damage (for example property damage) and indirect damage (for example lost profit or consequential damage). You may never exclude your entire liability, but you can better limit it through your terms.

• Term of payment. If nothing has been agreed, the legal payment term for invoices between SMEs and self-employed people is 30 days. If you want a shorter payment period for your invoices, you must have explicitly recorded this in your general terms and conditions or agreed in a contract.

 

Keep your Administration in Good Standing!

If you are planning to set up a new business in the Netherlands, you must have to consider government and other rules. Especially if you are acting as Director of the Dutch company, it’s important that your Dutch company complies with such regulations, in order to avoid any personal liabilities. 

Some of the most important company matters that you should consider are:

• Timely filing of tax returns

• Acceptance of the Financial Statement during an Annual General Meeting (preparation of a Resolution)

• Timely filing of the Financial Statements at the Chamber of Commerce

• Updating of Chamber of Commerce records and payment of the registration fee

• Cooperation during ‘official’ company visits or tax audits (by the tax authorities or other agencies)

• Use of proper agreements and Dutch invoice requirements

• Etc. etc.

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INCO Business Group can inform you, and assist you among such company matters by appointing a dedicated Company Officer. 

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The Company Officer service is an optional service that will allow you to have a Company officer available throughout the first year, whenever you need him/her. The Company officer will ensure the company is in good standing(apply for all Tax ID's, assist with bank account opening), and will avoid unnecessary legal liabilities for the (non-resident) board (timely filing of reports, etc.).

Read more about our Company Officer services. 

To comply with the tax filing and bookkeeping requirements, you can consider our Accounting Services, starting at only 125 EUR per month. 

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Government Support

There are several government agencies that can support you when starting your Dutch business, such as; 

• - The Netherlands Chamber of Commerce (KVK) provides information on creating a business plan and carrying out market research as well as other issues. They will provide you with the addresses and telephone numbers of all local offices.

• You will find information about, for example, the investment climate in the Netherlands, the sectors that offer the most opportunities and the possibilities of finding local business partners on the Holland Trade and Invest website.

• - The Dutch Tax and Customs Administration offers you information about which taxes you have to pay and how to keep your accounts up to date. It is possible that you are entitled to special schemes.

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